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Banks Are Now Accused of Cheating Customers Billions

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Re: Banks Are Now Accused of Cheating Customers Billions

#41

Post by clooless »

My 80 yr old mom had her atm card stolen. The guy withdrew close to 5k in small dips over a week. He had the pin, so my guess is he watched her enter it then distracted her to swipe the card. Bank refuses to cover it, despite her reporting it immediately on discovery. They claim if he had the pin, then she was negligent, and they are not responsible.

This presumably happens regularly, as the guy's con was very practiced and slick and he knew exactly what to do to maximize the payoff. But the bank didn't pick up on the obvious pattern, and evades responsibility by blaming the victim.

Re: Banks Are Now Accused of Cheating Customers Billions

#43

Post by loeg »

bluecalm wrote: post #16
loeg wrote: post #6

Relevant recent Levine article on this from last week: https://www.bloomberg.com/opinion/articles/2024-08-07/ai-com... > Cash sweep sweep > If you go to a bank and say “I’d like to open an account and deposit some cash,” they will happily open a checking account for you, take your cash, and pay you an interest rate that is, in round numbers, zero. [4] (My checking account pays 0.01%.) If you say “no, I want a savings…

One data point: IBKR pays you 4.83% right now so I think it's quite good. Not the full interest rate but it's a reasonable in my view payment for their service. They also pay you for every day the cash sits in the account. You can also buy any market funds and pay very little for the transaction. Just 2 days ago they also told me that I paid enough in market data refresh request (they are very explicit that those are…

If you're going to the effort of switching from 0.01% to market rates, you might as well go straight to Vanguard and get 5.2% and pay essentially nothing in other fees. I don't think there's much in the way of compelling reasons for retail investors to select IB.

Re: Banks Are Now Accused of Cheating Customers Billions

#44

Post by ozim »

0cf8612b2e1e wrote: post #5

Who has the best interest rates for idle cash? I have been using Marcus, but it is not a huge burden to shop around.

Well I am glad I don’t see people writing about “high yield savings accounts” as often I see that copy pasted from old tutorials on basic investing.

Maybe I am wrong but I don’t think there were any “high yield” savings accounts for at least a decade or even more.

All savings accounts I see are mostly below inflation or around the same. Where high yield for me would be at least 1% or 2% above inflation.

Re: Banks Are Now Accused of Cheating Customers Billions

#45

Post by loeg »

dmoy wrote: post #14
0cf8612b2e1e wrote: post #5

Who has the best interest rates for idle cash? I have been using Marcus, but it is not a huge burden to shop around.

For money markets, it's typically vanguard. Other brokers that are not bad for sweep include IBKR, Fidelity, Schwab, etc. But vanguard will always have higher interest on cash. Marcus is FDIC insured savings though, which has slightly different implications. There's websites that compare current highest savings rates (nerdwallet, bankrate, whatever). Going in the other direction, there are things like SGOV or Treasur…

> Going even farther than that direction, there's muni bonds, funds, or money markets. At which point you're probably back to Vanguard for the best rates. (But again, not the same exact characteristics as a savings account)

Yeah, very different product. Muni bonds are riskier than treasuries and much longer term than money market funds / treasury bills. E.g., VWSTX ("ultra short term muni") has an average maturity of over a year and 45% of portfolio is worse than AA. Vs VMFXX (money market) with an average maturity of 11 days and the entire portfolio is backed by the US government, which is essentially as good as it gets.

Re: Banks Are Now Accused of Cheating Customers Billions

#46

Post by jancsika »

reaperducer wrote: post #13
Animats wrote: post #9

Earlier quoted context omitted.

Yes. Before brokerages were part of banks, cash in a brokerage account was usually stored in a money-market fund, with whatever interest money market funds were paying. Once merging with a bank, cash was swept into an in-house bank account. This didn't matter much when money market funds were paying near zero interest. But the zero interest rate era is over. Except for demand deposits in banks, which pay well below m…

My parents instilled in me a mild distrust of banks. It's for this reason that I get my statements mailed to me each month, and each month I reconcile what's on the paper with what's in my spreadsheet. Guess what? Every year I find a mistake in at least one bank statement. And it's always in the bank's favor. Sometimes it's a few cents, but once it was a few hundred dollars across multiple errors. When I've told peop…

Dollars to donuts you've spent more in your own time reconciling than you've recovered in bank errors.

Re: Banks Are Now Accused of Cheating Customers Billions

#47

Post by pitaj »

0cf8612b2e1e wrote: post #5

Who has the best interest rates for idle cash? I have been using Marcus, but it is not a huge burden to shop around.

In HYSAs, SoFi gives you 4.6% if you direct deposit every month. The direct deposit doesn't need to be significant, just $1 is enough from what I hear (I do ~$50).

Re: Banks Are Now Accused of Cheating Customers Billions

#48

Post by pitaj »

ozim wrote: post #44
0cf8612b2e1e wrote: post #5

Who has the best interest rates for idle cash? I have been using Marcus, but it is not a huge burden to shop around.

Well I am glad I don’t see people writing about “high yield savings accounts” as often I see that copy pasted from old tutorials on basic investing. Maybe I am wrong but I don’t think there were any “high yield” savings accounts for at least a decade or even more. All savings accounts I see are mostly below inflation or around the same. Where high yield for me would be at least 1% or 2% above inflation.

Inflation is now below 3%. HYSAs are above 4% right now, so are beating inflation by a good margin.

Of course, changing interest and inflation rates can change that.

Re: Banks Are Now Accused of Cheating Customers Billions

#49

Post by felipemnoa »

reaperducer wrote: post #13
Animats wrote: post #9

Earlier quoted context omitted.

Yes. Before brokerages were part of banks, cash in a brokerage account was usually stored in a money-market fund, with whatever interest money market funds were paying. Once merging with a bank, cash was swept into an in-house bank account. This didn't matter much when money market funds were paying near zero interest. But the zero interest rate era is over. Except for demand deposits in banks, which pay well below m…

My parents instilled in me a mild distrust of banks. It's for this reason that I get my statements mailed to me each month, and each month I reconcile what's on the paper with what's in my spreadsheet. Guess what? Every year I find a mistake in at least one bank statement. And it's always in the bank's favor. Sometimes it's a few cents, but once it was a few hundred dollars across multiple errors. When I've told peop…

I'm really curious to know what type of bank errors you are talking about. If they are true errors then they should not be biased either way. i.e. sometimes they would be biased on your favor. But if they are always biased in their favor then maybe they are not really errors?

Re: Banks Are Now Accused of Cheating Customers Billions

#50

Post by cowthulhu »

dadbot wrote: post #10

Not sure if is the same, but I noticed that account interest rates that went down when the reserve rates went down didn't go back up. We opened up accounts for our kids at a local credit union that had close to 0% interest. Fast forward 2 years and the rates are just as bad or worse. Savings accounts are 0.25% compared to >4% at other credit unions.

Credit union deposit rates are usually tied to how much they need deposits, as opposed to what prime/sofr/fed are at. Credit unions whose lending isn’t keeping up with deposits (which is especially common in smaller CUs) will keep rates low to avoid paying a bunch of interest of funds that they can’t use productively.
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